Global Regulatory Focus on Crypto Platforms Post FTX Collapse

Urgency for Global Crypto Regulation

The collapse of the FTX crypto exchange has underscored the urgent need for global regulation in the crypto industry. With over a million creditors facing billions in losses, there is a heightened call for international laws to govern crypto platforms effectively. The International Organization of Securities Commissions (IOSCO) has spearheaded efforts to address this urgency.

IOSCO's Regulatory Guidelines

IOSCO's new chair, Jean-Paul Servais, emphasized the importance of targeting “conglomerate” platforms in 2023. These platforms, which offer multiple services such as brokerage, custody, and token issuance, present inherent conflicts of interest. To address these issues, IOSCO plans to implement established regulatory standards from other industries, avoiding the need to create new frameworks from scratch.

Learning from Past Oversights

Previously, international regulators hesitated to establish specific regulations for cryptocurrencies like Bitcoin. However, the financial impact of FTX’s downfall has shifted perspectives. Servais noted that ignoring crypto risks is no longer an option, highlighting the need for a proactive regulatory approach.

Coordinated International Efforts

IOSCO plays a crucial role in coordinating regulations among G20 countries and beyond. While guidelines for stablecoins are already in place, the focus will now shift to exchanges handling these digital currencies. The emergence of crypto “conglomerates” has made it essential to address potential conflicts of interest.

The European Union's MiCA Framework

Servais pointed to the European Union's MiCA framework as a promising foundation for global regulation. This framework prioritizes the supervision of crypto operators, offering a structured approach to managing the complexities of the crypto market.

By focusing on these key areas, international regulators aim to mitigate risks and ensure a more secure environment for crypto investors worldwide.